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Fundamentals of Financial Planning

Brittany Taylor, CFP® David Darwish, CFP® Matthew Costigan, CFP®, CPA/PFS


On Wednesday, July 8, HBKS Wealth Advisors hosted a webinar addressing three fundamentals of financial planning: personal financial management, retirement planning, and life insurance or protection planning. Following are highlights from the presentation:

Personal financial management by Brittany Taylor

  • It is important for individuals to make their financial health a priority.
  • Begin by creating a budget. Available tools include spreadsheets, software programs and budgeting apps. Apps are helpful because you can download transactions from your accounts daily to monitor your spending.
  • Make your budget realistic. Determine how much you spend on essentials like your mortgage or rent, car loans, groceries and utilities. Then determine which non-essential items are appropriate for you and your family. It is generally eye-opening to realize how many non-essential items you can live without.
  • Couples should work on their budget together to ensure you get both expenses in the budget.
  • Monitor your budget on a regular basis. Check your progress to see what might need adjusting or what expenses you need to be more diligent about reducing.
  • You can use the discretionary income that remains to set your eyes on your short-term goals, like paying down debt, and long-term goals, like college educations for your children and savings for your retirement.
  • You should have emergency savings that cover three to six months of your budgeted expenses to protect against an unforeseen costly emergency, such as a job loss.
  • Have money from your income automatically moved to your savings and investment accounts. Automating your savings plan can be very helpful in reaching your financial goals.
  • Start saving and investing early. The cost of waiting until you have larger sums is expensive, as you are giving up compounded returns. Even if you can only commit to $50 or $100 a month. You can increase the amount as you pay off debt and redirect that money to savings.
  • Paying your household bills on time will help you build credit. You can also use credit builder loans, where you borrow a small amount but don’t have access to the funds until you pay the loan in full. Or you can use a secured loan, which is backed by some collateral like cash in a savings account. You can also use a secured credit card to help you build enough credit to get an unsecured card.
  • Avoid applying for multiple cards or loans too close together, and keep credit card accounts open to improve your credit score.
  • There is good debt and bad debt. Good debt includes mortgages, student loans and car loans. Bad debt includes high-interest credits cards, personal loans for discretionary purposes and payday loans. Too much of a good debt can turn it into a bad debt.
  • If you have excessive credit card debt, you might be able to negotiate a lower rate with the issuer or transfer the debt to a lower interest rate card.
  • Prioritize your credit card payments to eliminate the smallest balances and the debt with the highest rates. Once you pay a debt off, redirect the payment to the next credit card.
  • Establishing good financial habits early helps you set the tone for your financial success.

Retirement planning by Matthew Costigan

  • Retirement planning is absolutely within your control. You might not be able to control the equity markets, but with proper techniques and discipline, you can get very good results with your retirement plan.
  • Albert Einstein: “Compound interest is the eighth wonder of the world.” The quote highlights the benefits of starting to save early and watching your retirement savings compound.
  • $10,000—about $833 per month—invested annually from age 25 earning at a 6 percent annualized rate grows to nearly $1.7 million at age 65; if you wait until age 35, you’ll have only about half that.
  • The IRS provides incentives via tax savings to save for retirement, including employer-sponsored 401(k) plans and IRAs for individuals. It is important to work with a professional financial advisor to know the IRS guidelines for various retirement plan options.
  • If you are employed and your employer offers a 401(k) plan, make that plan a savings priority. The money that goes into the plan comes out of your paycheck and into your account automatically. You set it and forget it. If your employer offers a matching contribution, contribute at least as much of your earnings to get the full match.
  • Dollar cost averaging, which is what you are doing when you contribute to a plan monthly, is your friend. The lows in the market associated with the COVID-19 pandemic allowed regular investors to buy equities at bargain prices before the market recovered whereupon they achieved substantial gains.
  • IRAs are available to all individuals. You can invest pre-tax dollars in a traditional IRA or after-tax dollars in a Roth IRA. With a Roth IRA, your dollars grow tax-free; you don’t pay taxes on your withdrawals in retirement.
  • IRS regulations allow for tax-deferred contributions of up to $6,000 a year—$7,000 a year for individuals over age 50—to a traditional IRA.
  • There are a variety of IRA plans for self-employed individuals.

Life insurance by David Darwish

  • Your retirement planning may be derailed without the proper protections. You should protect the wealth you worked so hard to build.
  • Various life events call for reevaluating your insurance protection: a job change (some employers have plans that offer life insurance); marriage (if something happened that required you to replace lost income from you or spouse); a new home (term life could help pay off your mortgage payments if one of you passes away); a baby (have coverage in place to protect your entire family).
  • There are two general types of life insurance: term and permanent. You purchase term insurance for a specified period of time, most commonly 20 or 30 years. The older you are, the more expensive the coverage. Permanent is for life and could eventually be used to provide liquidity to your estate or to fund other intentions, like creating a legacy for future generations.
  • With term, there is no cash build up. With permanent life insurance you can build cash value—could be considered an investment asset class.
  • Permanent insurance will require a medical exam. if you are in your 20s or 30s and have no health issues, you might not have to have a medical exam for term insurance.
  • A term insurance conversion feature allows you to convert to permanent insurance up until the end of the term, which could be beneficial if you have a medical issue at that point that might otherwise leave you uninsurable.
  • Some types of permanent insurance offer long term care riders that allow you to use benefits prior to death.
  • See a financial advisor for a life insurance analysis to determine how much insurance you need. The general rule of thumb is that you should have about five to 10 times your annual salary in life insurance coverage.
  • Premium costs will vary based on your age and health condition.
  • Disability insurance pays you if you are injured or ill and can’t perform your normal work duties. You can buy it individually or through your employer. It is usually less expensive through an employer. You can purchase short- and/or long-term disability.
  • Disability policies can provide funds for a variety of uses: to pay your mortgage, to make your 401(k) contributions, for key-person coverage for businesses.
  • Disability payments typically cover 50 to 60 percent of your base income. If you pay the premiums, the benefits are tax-free; if your employer pays the premiums, your benefits will be taxable.


You can watch the full presentation and download the materials here.

The information included in this document is for general, informational purposes only. It does not contain any investment advice and does not address any individual facts and circumstances. As such, it cannot be relied on as providing any investment advice. If you would like investment advice regarding your specific facts and circumstances, please contact a qualified financial advisor.

Any investment involves some degree of risk, and different types of investments involve varying degrees of risk, including loss of principal. It should not be assumed that future performance of any specific investment, strategy or allocation (including those recommended by HBKS® Wealth Advisors) will be profitable or equal the corresponding indicated or intended results or performance level(s). Past performance of any security, indices, strategy or allocation may not be indicative of future results.

The historical and current information as to rules, laws, guidelines or benefits contained in this document is a summary of information obtained from or prepared by other sources. It has not been independently verified, but was obtained from sources believed to be reliable. HBKS® Wealth Advisors does not guarantee the accuracy of this information and does not assume liability for any errors in information obtained from or prepared by these other sources.

HBKS® Wealth Advisors is not a legal or accounting firm, and does not render legal, accounting or tax advice. You should contact an attorney or CPA if you wish to receive legal, accounting or tax advice.

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